The Securities and Exchange Commission announced on Tuesday fraud charges against five individuals. According to the US regulator, they ran a call center in Medellin, Colombia, which used high pressure sales tactics and made false and misleading statements to retail investors, trying to convince them to buy the stocks of small companies trading in the US markets.
The complaint filed by SEC on 14 March 2022, names Chester Alvarez, Canadian citizens Francis Biller, Raymond Dove, and Troy Gran-Brooks, and Dutch citizen Justin Plaizier as operators of the call center.
SEC alleges that the five individuals set up as phony investment management firms, with fake names, websites, and phone numbers. The regulator details that using the false personas, the defendants orchestrated a pump-and-dump scheme and made false and misleading statements when they promoted the stock of 18 issuers. The SEC estimated that the scheme generated over $58 million in trading from.
Furthermore, the Commission alleged that defendants were paid $10 million for promoting thinly traded stocks, which they misled investors to believe had high prospects for success.
Paul Levenson, Director of the SEC’s Boston Regional Office, said:
These scam artists went to great lengths – using bogus companies, aliases, and spoofing their phone numbers – to defraud and mislead investors into a pump-and-dump scheme. We urge investors to read the investor education materials about fraud in the ‘penny stock’ market, which are available at Investor.gov.
The SEC charged the defendants with violations of antifraud provisions of the securities laws. It further charged Alvarez with violating market manipulation provisions of the securities laws. The regulator also seeks injunctive relief, disgorgement plus prejudgment interest, civil penalties, and a prohibition on participating in any offerings of penny stocks by all defendants.
Earlier in March, SEC charged venture capital adviser Alumni Ventures Group, LLC for making misleading statements regarding its management fees.
